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The power of powers of appointment

It is not a closely held secret that estate planning and probate in Michigan are complicated. However, some key tools corollary to the process might help individuals avoid the most frustrating and confusing legal procedures surrounding inheritance and long-term wealth management.

Responsible property owners often plan carefully to ensure the just and even distribution of their estates. Of course, these plans often include forming trusts to distribute wealth. Courts and beneficiaries alike typically respect those plans, but even the most carefully laid plans occasionally require adjustment. To that end, one might write a power of appointment.

The United States Code, accessed through the U.S. Government Printing Office, defines the general power of appointment as a limited privilege to perform acts on behalf of those interested in a trust. With regards to estate planning, these interested parties include the creditors of the estate, the estate itself, the decedent and the decedent's creditors. However, there are often less complicated options available in Michigan for simple trust adjustments.

This specific power is often useful in situations where the law disallows the use of other legal tools, such as trust decanting, or in other words the movement of assets from one trust to another. A Michigan Bar Journal article on decanting provides an example of when power of appointment is necessary in the state. Specifically, a power of appointment could allow:

Changes to beneficiaries named but not currently receiving benefits

Modification of last resort beneficiaries

While trusts are often a fundamental component of estates, their administration is anything but basic. The Bar Journal article names a number of pitfalls associated with trust modification: Those attempting to alter trusts are often well advised to proceed with the same amount of care and preparation used in the documents' original preparation.

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